At present, incentive schemes are a modern form of reward, owing their attractiveness to having employee performance highly correlated to the performance of the company. An effective incentive scheme allows for the boosting of company financial performance while minimizing the risk of losing key employees.
Incentive schemes for employees and associates
An incentive scheme can also play a significant role in building employee loyalty to the company, strengthening the sense of responsibility for success, and defining clear paths to promotion and career advancement.
The eligibility criteria for granting specific benefits to incentive scheme participants should take into account the specificity of the company and the objectives of the scheme. The incentive scheme criteria are most often based on measurable factors (e.g. employee or company performance) which, however, do not prevent the amount of an incentive component from being adjusted based on “soft” factors (e.g. employee engagement or positive attitudes).
Contrary to popular belief, incentive schemes can be addressed not only to executive and managerial staff, but also to other employees and associates (employed under civil law contracts, including B2B contracts).
Kochański & Partners support companies in developing and implementing all types of incentive schemes
Our advisory services cover in particular:
- developing the most attractive incentive scheme model tailored to employer needs (incentive schemes based on shares or derivative financial instruments, share option schemes, schemes based on the issue of subscription warrants and shares, or phantom shares);
- advising on the implementation of all types of non-salary benefits, including assessing tax effects and the effects of introducing contributions on such benefits;
- preparing an incentive scheme implementation strategy taking into account appropriate corporate advisory;
- providing tax and insurance advice on incentive scheme effects, including taxation and introduction of contributions on incentive scheme benefits;
- assessing the eligibility of incentive schemes for preferential taxation, including filing applications for tax rulings;
- drawing up incentive scheme documents (including incentive regulations, incentive scheme participation contracts, bonus agreements, and non-competition contracts);
- providing assistance in determining incentive scheme terms and criteria, and specifying verification methods for compliance with such criteria;
- providing support in negotiations with trade unions and employee representatives during the incentive scheme implementation process;
- performing legal and tax audits of existing schemes, in particular assessing eligibility for preferential taxation, determining the instance triggering the tax obligation.
Benefits for employers include:
- a motivated team of employees and associates;
- retention of key employees;
- reduction in employee turnover;
- improvement of company financial results;
- tax-safe solutions.
International retail chain
Comprehensive advice for an international retail chain on entering the Polish market, including assistance in employment structuring; advice on the selection of appropriate employment forms, employee bonus and incentive schemes; legal assistance in taking over groups of employees from their previous employer.
Joint-stock company from the TSL sector
Advice on the implementation of a tax-effective employee incentive scheme based on derivative financial instruments, including the preparation of required documentation for Poland’s largest TSL company listed on the Warsaw Stock Exchange.
Advanced technological equipment manufacturer
Legal advice on the PLN 18 million pre-IPO process (negotiating an investment contract, share lock-up contracts and deposit contracts), including advisory on creating an incentive scheme for the company’s key managers and employees.
Polish shoe company
Comprehensive legal advice on an incentive scheme for management board members of a listed company, based on subscription warrants and a conditional share capital increase, including the preparation of scheme implementation documentation, Bonus Regulations, corporate documents relating to a conditional share capital increase and the issue of subscription warrants, with the pre-emptive right of shareholders being excluded in full with regard to shares issued within the contingent capital and subscription warrants, and the drafting of a model incentive scheme participation contract.
Comprehensive advice on the preparation and implementation of an incentive scheme for employees working under employment contracts and associates employed under B2B contracts, including the development of a strategy, taking into account incentive scheme criteria, as well as scheme verification and bonus settlement rules.
Attorney at Law, Partner, Head of Labor Law Practice